a p r i l 2 0 0 3 2 0 0 2 r e s u l t s 2 0 0 3 - 2 0 0 5 b u s i n e s s p l a n
TRANSCRIPT
A p r i l 2 0 0 3
2 0 0 2 R e s u l t s
2 0 0 3 - 2 0 0 5 B u s i n e s s P l a n
Specialized units provided by Sanpaolo IMI and BNP Paribas
BANCA CR FIRENZE(Parent Company)
Infogroup Datacentro
Centro
Telemktg.Citylife
PerseoFinance
CR PISTOIAe PESCIA CR ORVIETO CR MIRANDOLA
CRCIVITAVECCHIA
FindomesticLiberamente
Network
Product Companies Service Companies
Consumer Credit
FinancialPlanners
Centrovita
CentroLeasing
CentroFactoring
Cerit CR FirenzeGest. Int.le
100.0%
51.0%
51.0% 51.0%73.6% 73.8%
80.0%
50.0%
41.0% 46.0%
ArvalItalia
22.5% 100.0% 100.0%
97.1%50.0%
60.0%
Changes in the Group composition
2
3
INTEREST MARGIN 588.4 568.8 + 3.5 %
2002 2001 PF Change
Euro mn
NON-INTEREST INCOME 332.0 338.3 - 1.9 %
Net commissions & other net income 323.6 324.5 - 0.3 %
of which net commissions 230.2 244.7 - 5.9 %
Trading 8.4 13.8 -38.9 %
Equity investments 15.0 10.0 +50.0 %
TOTAL INCOME 954.8 933.6 + 2.3 %
2002 Consolidated results
Dividends 19.4 16.5 +17.6 %
2002 Consolidated results
TOTAL COSTS 659.1 638.5 + 3.2 % +1.4 % - 1.7 %
2002 2001 PF Change Ex FINDOMESTIC Banca CR Firenze
Euro mn
Personnel expenses 370.1 364.5 +1.5 % FLAT - 1.5 %
Other costs 223.7 210.1 +6.5 % +3.9 % - 3.5 %
Depreciation 65.3 64.0 +2.1 % +2.4 % +3.2 %
OPERATING INCOME 295.7 295.1 + 0.2 %
Goodwill amortisation 20.9 21.1 - 0.9 %
Total provisions 97.1 86.9 +11.7 %
Exceptionals 13.0 12.2 +6.6 %
Taxes & minorities 108.1 113.4 - 4.7 %
GROUP NET INCOME 82.6 92.2* - 10.5 %
4* 2001 net income benefited by Euro 6.4 mn transfer from General Banking Risk reserve
DIRECT FUNDING 12,340 11,058 + 11.6%
2002 2001 Change
INDIRECT FUNDING 13,956 14,092 - 1.0%
Assets under custody 5,758 6,064 - 5.0%
Assets under management 8,198 8,028 +2.1%
of which Discretionary accs. 1,948 2,340 - 16.7%
Mutual funds 4,471 4,089 + 9.3%
Insurance Products 1,779 1,598 +11.3%
TOTAL FINANCIAL ASSETS 26,296 25,150 + 4.6%
Euro mn
Total Financial Assets
5
Corporate37%
Retail23%
Small business18%
Consumer credit19%
Public bodies3%
Portfolio composition: by segment, average - by sector, B CR Firenze
Customers loans
6
Growth, diversification and balance
25%
7% 7% 6% 6%10%
5%2%
16% 16%
12.211.611.2
1.6 2.02.4
2000 PF 2001 PF 2002E
uro
bln
Customer loans - Findomestic
Indu
strial
pro
d.
Com
mer
ce
Text
ile
Bui
ldin
gHot
els
& tra
nsp.
Agr
icol
.& foo
d
Min
eral
& E
nerg
y
Fam
ilies
Oth
ers
Com
mun
icat
io
n
1.12% 1.14%1.06%
Credit quality
Close loan quality monitoring
7
51.9%52.6%
54.4%
2000 PF 2001 PF 2002
2.29% 2.36%2.28%
Net NPLs/Net loans
Gross NPLs/Gross loansNet NPLs cover ratioGross NPLs Net NPLs
261.5281 284.3
125.8 133.2 129.7
2000 PF 2001 PF 2002
Eu
ro m
n
1999 NPL securitisation recoveries: far better thenthe best case scenario
Credit quality - Perseo
8
0
45
90
M2000
J S D M2001
J S D M2002
J S D
Total recovered Scenario 1 Scenario 2
Scenario 3 Scenario 4
Eu
ro m
n
2003-05 Business Plan
9
0%
8%
16%
24%
32%
0% 10% 20% 30%
Branch market share
Fund
ing
mar
ket sh
are
Index 1.21
Index 1.15
Index 1.54
Banca CR Firenze Group
Index 0.97
Comparison with other regional banks shows there is no local roots advantage
Competitive positioning
10
0%
45%
0.00 1.00 2.00Penetration index*
Mar
ket sh
are
11.2%**
Firenze
TerniArezzo
Grosseto
ModenaViterbo
Massa
Prato
Siena
Livorno
PisaPerugia
Mantova
Pistoia
Funding
Lucca
8.6%**
Lending
0%
25%
0.00 1.00 2.00Penetration index*
Mar
ket sh
are
Firenze
Terni
ArezzoGrosseto
Modena
Viterbo
MassaPrato
SienaLivorno
Pisa
Perugia
Mantova
Pistoia
Lucca
Highly diversified market share and penetration index in the different local areas
11* Market share / Employee market share - as at 30/09/02 ** B.CR Firenze Group average
Competitive positioning
Much room for improvement
12
Performance analysis
Corporate macro-segment shows a negative performance
30.2%
6.1%
-1.3%
-12.2%
77.2%
Retail Affluent Private Bkg. SmallBusiness
Corporate
% N
et
inc
om
e*
* B. CR Firenze - Contribution to commercial banking net income - 2002
656,000Mass Market
140,000Affluent
85,000Small Business
4,000Private Bkg
15,000Corporate
Two markets - Retail Banking & Corporate & Private Banking
Transfer of the Small Business segment to the Retail market
Two vertically organized marketing Divisions
New marketing model
RETAIL BRANCHES CORPORATE CENTERS PRIVATE BKG. CENTERS
CORPORATE & PRIVATE BANKING DIVISIONRETAIL DIVISION
13
C U S T O M E R B A S E
Retail DivisionRetail
Division
F O C U S O N Industrialization of marketing actions
(CRM)
Packaging of offer
Reduction of service costs
Further customization of relationship
Increase in cross- and up-selling
Continuous development of financial planners network
Targets and Actions
FAMILY
SMALL BUSINESS
AFFLUENT
14
FAMILYFAMILY
Pro-active marketing campaigns
Propensity score
Fine-tuning of customer knowledge (Customer Insight techniques)
Identification of priority products (Next Product )
Cluster analysis
Reduction in portfolio managers from 408 to 345 (-15%)
Event management
Event definition and link to marketing actions
15
Targets and Actions
Industrialization of marketing actions (CRM)
Packaging of offer
Reduction of service costs
SMALLBUSINESS
SMALLBUSINESS
New integrated loan and marketing score platform
time saving (-30%)
Outbound and inbound call centers
New catalogue design
59% reduction in number of products from 506 to 207
8 new package products:4 deposit and 4 loan products
Revision and simplification of the credit granting process
Reduction in portfolio managers from 326 to 245 (-25%)
16
Targets and Actions
Industrialization of marketing actions (CRM)
Packaging of offer
Reduction of service costs
17
AFFLUENTAFFLUENT
Extension of portfolio model to all branches
Implementation of Personal Financial Planning
Portfolios adjustment to risk profile / Increase in commissions
Asset under custody portfolio advisory
Increase in portfolio managers from 154 to 313 (+103%)
Financial planners: 200 by 2005
Targets and Actions
Further customization of relationship
Increase in cross- and up-selling
Continuous development of financial planners network
Corporate & Private Bkg. Division
Corporate & Private Bkg. Division
Customization of relationship and Client Plan introduction
Monitoring of credit quality
Increase in penetration and focusing on areas with great development potential
New service model: dedicated portfolio managers
Dedicated offer development
Sinergies with Corporate segment
F O C U S O N
CORPORATES
PRIVATE BANKING
18
Targets and Actions
CORPORATES
CORPORATES
19
Perugia
Siena
Arezzo
Avenza
Empoli
Montevarchi
Firenze EstFirenze Ovest
Grosseto
Pisa-Livorno
Prato
Santa Croce
Viareggio
12 Corporate Centers + 2 Aid points120 portfolio managers
Dedicated marketing structure
Top foreign trade advisory
Leading role of portfolio managers
40 specialized consultants
Client Plan introduction
Service model
Targets and Actions
BOLOGNA
Sesto F.no
Profitable capital allocation
Implementation of Internal Rating system
Fine-tuning of the present pricing method
Risk-adjusted pricing
Switch to customers with higher credit
standing and lower risk/profitability ratio
20
Pricing
Risk(Internal Rating)
Target curve
High Low
Sp
read
Targets and ActionsCORPORATE
SCORPORATE
S
PRIVATEBANKINGPRIVATEBANKING
Siena
Arezzo
Empoli
Firenze Est
Firenze Ovest
Prato
Viareggio
Corner Avenza
Montevarchi
Corner Grosseto
Corner Pisa-
LivornoCorner
Santa Croce
Corner Sesto F.no
Corner Perugia
8 Investment Centers and 6 Corners at the Corporate Centers47 portfolio managers
Dedicated marketing structure
Investment Centers
Leading role of portfolio managers
Dedicated Personal Financial Planning
Service model
21
Targets and Actions
PRIVATEBANKINGPRIVATEBANKING
Introduction of Discretionary Accounts with prior consent
Customized Discretionary Accounts (multibrand & multimanager)
Alternative investments
Funds of hedge funds
Funds of private equity funds
Real Estate funds
New derivatives platform
Specialized advisory
Fiscal and succession advisory services
Tax planning
22
Dedicated offer
Targets and Actions
2003 - 05 TARGETS
23
0.101
0.138
0.084
0.1
0.083
0.067
0.076
0.05
0.1
0.15
2002 2003 2004 2005
Eu
ro
EPS 2003-05
+ 22% CAGR
24
The new marketing model will bring important improvement in profitability
Target lineBase line
Increase in profitability from every segment
Corporate macro-segment will reach a positive contribution
2002 & 2005 total income breakdown
25
+4.2 %
+21.2 %
Retail Affluent
144.3
88.8
TOTAL INCOME
Private Banking
14.0+15.3 %
+15.6 %
Corporate Center
43.9
Small Business
103.4
118.3
Corporate Finance
18.5
Shareholdings
92.8 624.0
+16.2 %
+25.0 %+36.7 %
-28.8 %*+12.1 %
2002 total income 2005 total income increase
* Negative performance due to 2002 Eptaconsors extraordinary dividend
70.2%
66.3%
62.6%
67.1%
9.7%
14.4%
11.3%
8.9%
2002 2003 2004 2005
ROE and Cost/Income
26
Net growth in overall profitability
Business plan implementation costs will have an impact mainly in 2003
Cost / IncomeROE
Costs breakdown to 2005
27
TOTAL COSTS 659.1 726.0 + 3.2% +1.5 % +1.7 %
2002 2005 Change FINDOMESTIC B. CR Firenze CAGR Excluded
Euro mn
Personnel expenses 370.1 386.0 + 1.4 % + 0.4 % + 0.4 %
Other costs 223.7 264.0 + 5.7 % + 2.9 % + 3.4 %
Depriciation 65.3 76.0 + 5.0 % + 4.3 % + 2.9 %
A p r i l 2 0 0 3
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Back-up slides
28
Capital ratios
TIER 1* 896.5 785.6 + 14.1%
2002 2001 Change
Euro mn
TIER 2 608.5 454.1 + 34.0% Deductions 114.5 124.0 - 7.6%
REGULATORY CAPITAL 1,390.4 1,115.7 + 24.6 %
SOLVENCY RATIO 9.8% 8.3% + 150 bp
TIER 1 RATIO 6.2% 5.7% + 50 bp
* Core capital - No preference shares issued 29
GDP +1.4% + 2.6% + 2.5%
2003 2004 2005
Domestic Demand +2.0% + 2.5% + 2.5%
Inflation +2.2% + 2.1% + 1.7%
Customer Loans +5.4% + 6.2% + 6.1%
Direct funding +4.7% + 5.1% + 5.1%
Spread
(Mk-up+Mk-down) +3.5% + 3.4% + 3.4%
Prometeia, December 2002
Macroeconomic scenario
30
-161
-81 -83 -82
-250
-300
-150
0
1999 2000 2001 2002 2005
Banks’ headcount reduction
370
383 383 386
300
420
2002 2003 2004 2005
Personnel expenses: +1.4% CAGR
Personnel
31
Group Banks
Headcount reduction
Incentive plan (around Euro 12,5 million)
Old / New personnel salary ratio around 2:1
Cerit
Sector regulations: use of sector redundancy fund
Findomestic Banca – Consumer credit
Findomestic Banca 3.97
BNL 3.27
Fiatsava 2.92
Destsche Bank Prestitempo 2.24Agos Itafinco 2.04 2002 new business
volume
Vehicles Home appliances Personal Loans Revolving2003 new business trend
32
25.6%25.0%
21.0%28.4%
Personal loans
Home appliances
Vehicle financing
Revolving cards
2003 New business
2001 2002 2001 2002
NPLs ratio Cover ratio
0.95% 1.12% 125 118